It is nice to know there are some out there who can appreciate that good analysis may lead to an alternate opinion to the majority.
I have been following the SDL story for quite a while now, since 4 or 5 years ago when my brother in law came back from a conference having heard an SDL director presentation and raving about how good the project was and that he had gone heavy in SDL shares. Not sure my sister was too impressed.
Anyway, I was a little more sceptical (still am!) and wary of the difficulties of getting a major project up and running in Africa, especially one involving the construction of a 500km heavy haul railway and port infrastructure. So I didn't buy in at that time but always kept an eye on how they were going.
Obviously 2010 was a tragic year for SDL, and in late 2010 GC was appointed MD. I had just spent two years working for GC on another iron ore project so I had another look at SDL and decided that GC was the right guy to take it to the next stage of development ie complete feasibility studies, maiden reserve etc. The achievement of these development milestones would see the SP re-rated so I bought in.
I sold out around Apr 2011 after the DFS was announced because at that time the hype around SDL, especially on this forum, was extraordinary and in my opinion far exceeded the reality of where they were at and the difficulty they were going to have in securing JV partner and project finance.
I bought in again, but not as heavy as before, a month or so after the Hanlong TO was announced because the SP settled at a fair discount to the TO price which I found to be strange. After some months of further research I formed the view that Hanlong were basically a bunch of amateurs and that the TO would be dragged out for a long time, so I sold out again (this time for a small loss, but at a price much higher than current SP).
So will I buy back in again? Certainly not before NDRC approval and even then will need to read the tea leaves regarding Hanlong's ability to go all the way. Currently I have strong doubts.
Unfortunately, SDL is now all about your view of the Hanlong TO succeeding and therefore if (and when) you will get $0.57. It is now not about the project itself ie resource definition, infrastructure, political risk, iron ore price forecasts, development milestones etc.
I have been following SDL so long, and it is such an interesting story (someone will write a book about it one day), so that is why I am still here. I would also like to see GC close it out one way or the other, he is a class act.
But at this point in time I'm not sinking any hard earned into it. Too sceptical of Hanlong and if Hanlong can't close the deal, where will the SP settle?
IMO DYOR
SDL Price at posting:
32.5¢ Sentiment: None Disclosure: Not Held
